US propylene supplies are expected to return to levels not seen since 2006, but the increase in the feedstock supply wont come close to meeting the global demand for polypropylene during the next decade, according to the quarterly Platts Global Polyolefins Outlook, released by benchmark pricing agency Platts.

Shale gas exploration has given the US an opportunity to enter the on-purpose propylene market in a big way, said Jim Foster, editorial director of petrochemical analysis at Platts.

While much of the propane dehydrogenation (PDH) announcements were designed to offset the lost propylene production from refineries and crackers that have switched to the lighter ethane feedstock, we will face a potential oversupply of propylene in the near future," jr sffrf.

However, the oversupply will eventually be absorbed by increasing global demand for PP. Globally, its estimated there is a need for nearly 18 million tons of new PP capacity by 2024, according to the Platts report.

Most of the demand will be created in China, and much of the new PP production capacity is expected to be built in Asia. Producers in China have announced plans to add more than 3 million tpy of PP capacity on-stream.

At the same time, there are 16 PDH plants being planned in China, which would produce more than eight million mt of the feedstock propylene annually. Of these, eight have already announced they will be using propane sourced from the US.

The US is positioned to capitalize on the PP shortages in two ways, said Foster. US-produced plastic, made from inexpensive shale-based propane, can be exported globally. Or, if other regions  particularly Asia  prefer to produce domestically, US-produced natural gas liquids (NGLs) will be exported to feed those units.